Chakra Discussions

ISKCON Chapter 11 Reorganization Plan Filed

by Gupta Das (Joseph Fedorowsky)

Posted March 3, 2004

Dear Devotees and Friends: Hare Krishna. All Glories to Srila Prabhupada.

On February 27, 2004, a milestone was reached when the ISKCON Chapter 11 Reorganization Plan was filed in the U.S. Bankruptcy Court which will oversee the distribution of financial compensation to over 500 Gurukuli tort claimants.

The creation of a multi-million dollar fund to compensate every Gurukuli who filed a claim could not have come about without the blessings of Srila Prabhupada. He is certainly present in the hearts of the many inspired devotees throughout the world who came together to voice their support for those who were abused in darker days.

To the credit of every ISKCON member and supporter there are two extraordinary features of this Plan which have not been found in the policy response of other religious organizations to allegations of child abuse.

The first feature is that compensation will be offered to every Gurukuli rather than to only those who sued ISKCON. The decision to reach out and compensate every child was made in spite of the fact that the dominant legal view two years ago was that ISKCON could prevail in the Texas state litigation on technical grounds at a cost which would have been substantially less than creating a tort fund for all Gurukulis.

The second feature is that a substantial portion of the tort fund will be made up of voluntarily contributions by non debtor individuals, organizations and temples. The fund would have been much smaller had it been based solely on the liquidation value of the ISKCON debtors who filed for bankruptcy protection.

The Plan itself provides a detailed legal and financial roadmap as to the classification and treatment of claims, the size of the fund, funding sources, releases, timing, third party contributors (that is, voluntary financial contributions to the fund made by those who are not Chapter 11 debtors), and the like.

There are three important procedural points to keep in mind about the Plan.

First, the Plan will likely be adjusted as feedback from the claimants, counsel and the court is obtained. Second, the Plan must be voted on by the claimants, who have been placed in various voting classes, before it is approved. Third, an independent determination as to the legality, adequacy and fairness of the Plan will be made by the Court.

Five different tort claimant classes are also proposed in the Plan: convenience class, opt-in class, deferred payment class, statute of limitations class, and late-filed claims class. Notably, every child who attended an ISKCON Gurukula and who made a claim will be compensated as provided for in one of these five classes.

While each claimant will receive a copy of the Plan and other documents before voting on the Plan, here is an abbreviated, introductory description of the different classes and compensation levels as it now appears in the Plan.

A convenience class will provide compensation in a range of $1,000 to $2,000 for those Gurukulis who have relatively minor claims. An opt-in class will provide compensation in a range of $1,500 to $15,000 for those Gurukulis who have more substantial claims, but who want to be paid out quickly without having their claims formally adjudicated. A deferred payment class will provide compensation with an undetermined minimum amount up to a maximum of $45,000 over the time it takes to fully fund the Plan, to those Gurukulis who submit their claim to estimation, arbitration or litigation. A statute of limitation class will provide $4,000 to those Gurukulis who may otherwise be legally barred from recovery. And, up to $4,000 will be provided to those Gurukulis whose claims were late-filed.

The tort fund will hold up to $15,000,000, depending on when the Plan is fully-funded. This amount includes monies received from the debtors equal to their liquidation value, which must be certified by professional auditors, as well as monies received from voluntary non debtor contributions made by individuals and ISKCON Temples worldwide. Insurance policy proceeds, should any be recovered from litigation by a number of ISKCON temples seeking payments from their insurance companies, will increase the absolute dollar value of the tort fund upward.

The Plan allocates $2,000,000 from the fund for a nonprofit youth development and support organization. That Social Development Program, or SDP, as it is called, will offer free membership to all Gurukulis who wish to participate, and the resulting Gurukuli membership body will have a direct management voice in its operation.

The purpose of the SDP is to deliver continuing developmental support and assistance to former and present ISKCON Gurukulis. This will include educational opportunities, social development assistance, career development opportunities, financial grants, and success mentoring programs. The SDP will not replace the Child Protection Office, which will continue to play a critically important role in the ongoing protection of children within ISKCON.

It is anticipated that finalization and approval of the Reorganization Plan will take six months or so, with initial disbursements to follow soon after. A copy of the Plan and other pertinent documentation will be provided to each claimant in the next two or three months, along with detailed instructions regarding class options, voting rights and deadlines.

To assure receipt of these papers, any Gurukuli whose mailing address has changed from that originally provided on their claim form should notify the courts and lawyers of the change. For contact information review the previous news articles, or go to http://www.harekrishnaclaims.com.